Investment Manager’s Commentary

Your Fund returned -2.3% during the month.

Rising bond yields halted the strong year-to-date rally in equity markets as firm economic and inflation data challenged assumptions about the direction of monetary policy. We suspect the other major theme animating equity markets this year – that of AI – is likely to have more lasting consequences for the Fund’s returns. The latest set of quarterly earnings reveal enormous increases in capital expenditure for the Fund’s three companies that are leading the race to bring AI to the rest of the economy. Alphabet, Meta Platforms (‘Meta’) and Microsoft will collectively spend ~$135bn in 2024, a ~35% increase on last year. Whilst we are optimistic that these investments can generate attractive returns on capital, it is impossible to know for sure at this early stage of the technology’s adoption. The payback will be shorter for Alphabet and Microsoft since their cloud services are already benefitting from strong demand for generative AI applications. Meta’s spending has more speculative elements, but the technology is no less relevant to its services. These uncertainties were reflected in divergent share-price performances during the month. Meta’s shares fell -10.7% to reverse some of the strong gains made so far this year (they remain +24% in 2024), whereas Alphabet’s rose +8.7%, supported by strong results across its major business units.

We are excited to have added a new investment to the Fund during the month. Amadeus IT Group is the global leader of ticket distribution and customer management software for the travel industry, primarily airlines. Having had a torrid time through the pandemic, as planes were grounded and corporate travel suffered structural challenges, we believe the shares now offer compelling value. Amadeus’s businesses serving airlines are more enduring than popularly perceived, whilst its relatively recent entry into providing essential software to hotels has enormous long-term potential.

The residual holding in Becton Dickinson was sold to make way for Amadeus.

Past performance is not a guide to the future. The value of the shares and the income from them can go down as well as up and you may not get back the full amount originally invested. Source: Yealand Fund Services Limited, NAV to NAV in sterling with net income reinvested. Returns are shown net of annual management charge, other expenses and net income reinvested. Returns do not include the effect of initial charges.

Investment Objective and Policy

The Company’s investment objective is to seek to achieve long term (at least 5 years) capital growth with some potential for income.

To achieve the investment objective, the Company’s investment policy is to invest principally (at least 80%) in a portfolio of global equities, and may also invest in other transferable securities, bonds (both corporate and government debt securities), collective investment schemes (“CIS”), warrants, money market instruments, cash, near cash and deposits. The Company may borrow and may enter into underwriting arrangements. It is the ACD’s intention that derivatives and forward currency transactions will only be used for the purposes of efficient portfolio management, including hedging, as defined by the Regulations.

The Company is actively managed and has, with the exception of the above noted minimum, no limit to which it can be invested in each sector or asset type, nor is there any particular geographic focus. The Portfolio Manager has full flexibility to adjust the proportion of the property of the Company depending on their view of market conditions and the assets which it believes are most likely to achieve the Company’s investment objective. From time to time the liquidity of the Company may be increased substantially if judged to be in the interests of investors.

The Company may invest in CIS which have different investment strategies or restrictions than the Company, including the ability to invest in derivatives for investment purposes and to gain exposure to assets which are not expressly listed above. Investment in CIS will usually be limited to those which invest primarily in the assets listed above and without exception, CIS will only be held in so far as the rules permit the Company to gain exposure to the assets held by those CIS.

A Glossary of Definitions which provides definitions to some of the technical language used on this website is available from www.yealand.com/policies.

Comparator Benchmark

To gauge the relative performance of the Fund, Shareholders may compare the Fund’s performance against the Investment Association’s Global Sector. This is not a performance target nor constrains the way in which the Fund is managed. For further information on the Sector and its intended use, please refer to the Fund’s Prospectus.